By Zara Maisango
Nigeria's Gross Domestic Product (GDP) recorded a notable year-on-year growth of 3.19% in real terms during the second quarter of 2024, reflecting a steady economic recovery. This growth surpasses the 2.51% recorded in the second quarter of 2023 and slightly improves upon the 2.98% growth rate observed in the first quarter of 2024. However, beneath this promising headline, there are signs of uneven progress and underlying vulnerabilities that need addressing.
The Services sector emerged as the key driver of growth, expanding by 3.79% and contributing a significant 58.76% to the total GDP in Q2 2024. In contrast, the Agriculture sector posted a modest growth of 1.41%, down slightly from the 1.50% recorded in the same period last year. The Industry sector, however, showed substantial improvement with a growth rate of 3.53%, rebounding from a -1.94% decline in the second quarter of 2023.
In terms of contribution to the total GDP, both the Industry and Services sectors saw increased shares in Q2 2024 compared to the previous year. The oil sector, in particular, demonstrated remarkable growth, contributing 5.70% to the total real GDP in Q2 2024. This marks an increase from the 5.34% recorded in Q2 2023, although it represents a decline from the 6.38% contribution in the preceding quarter. The oil sector's real growth of 10.15% year-on-year in Q2 2024 also signifies a sharp increase of 23.58 percentage points compared to the -13.43% recorded in the same quarter of 2023.
Despite these gains, the oil sector's quarter-on-quarter performance presents a mixed picture, with a decline of -10.51% in Q2 2024. Furthermore, Nigeria's average daily oil production stood at 1.41 million barrels per day (mbpd) in Q2 2024, an increase from the 1.22 mbpd recorded in the same quarter of 2023, but a decrease from the 1.57 mbpd produced in Q1 2024.
Meanwhile, the non-oil sector, which contributed 94.30% in real terms to the nation’s GDP in Q2 2024, slightly declined from the 94.66% share recorded in Q2 2023 but improved from the 93.62% contribution in Q1 2024. The non-oil sector's growth rate of 2.80% in real terms during Q2 2024 mirrors its performance in Q1 2024 but falls short of the 3.58% growth achieved in the same quarter of 2023. The sector's performance was primarily driven by Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), Trade, and Manufacturing (Food, Beverage, and Tobacco).
The disparity in growth rates among sectors reveals a skewed economic structure heavily reliant on the oil and services sectors. This imbalance echoes the economic complexities articulated by economist Ricardo Hausmann, who emphasizes the need for structural transformation and the development of complex, high-value industries for sustainable economic growth.
While the Services and oil sectors show robust growth, the agricultural and manufacturing sectors remain concerning. Agriculture, which should be a cornerstone of Nigeria’s economy, grew by a mere 1.41%, slightly below the 1.50% recorded last year. This stagnation is a red flag for a sector critical to employment and food security. Manufacturing, despite a modest recovery with a 3.53% growth rate, still struggles with high production costs, infrastructural deficits, and an inconsistent power supply.
Drawing a parallel to Napoleon's campaign in Russia, where initial military successes were undone by deep strategic miscalculations and the harsh realities of winter, Nigeria's GDP growth presents a narrative of progress tempered by economic challenges. The path forward requires addressing these structural weaknesses and fostering a more balanced, resilient economic foundation.
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